Include all relevant income

A sole trader had two sources of income: as a commercial finance broker and in letting out residential property. He was VAT-registered and used the flat-rate scheme.

After a visit from an HMRC officer it became apparent the taxpayer had not included in his VAT calculation rental income from his lettings business.

The taxpayer claimed he had not included the rental income because it was exempt and only his business as a commercial finance broker was registered for VAT.

The tribunal accepted the taxpayer had acted in good faith but noted for the purposes of the VAT flat rate scheme that the person’s ‘relevant turnover’ included the value not only of his relevant supplies but also that of his exempt supplies meaning income from rents should be included in the calculation.

The assessments and interest were therefore correct.

The taxpayer’s appeal was dismissed.

The flat-rate...